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The future of digital TV in Thailand

Digital TV industry encounters pressures from both revenue and cost perspectives leading to a downward trend in operating margin

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In January 2019, the National Broadcasting and Telecommunications Commission (NBTC) approved in principle for recall of the 700MHz band, currently being used for digital terrestrial television, for 5G development in Thailand.

With this process, the two options are offered

1) switching to 470MHz bandwidth or

2) returning the digital TV license and discontinued operating.  

In consideration of strategic factors, competitiveness and financial stability, EIC expects around 4 operators to give up their licenses.

These 4 discontinued operators will lead to insignificant effects on overall industry as the sum of revenues only accounts for 2% of the total digital TV ad spending and consumers still enjoy the remaining digital TV channels.

At the same time, digital TV network providers will lose a minimal amount of incomes and NBTC will subsidize about 20-25 billion baht on reforming spectrum.  

However, the remaining digital TV operators will continue facing challenges from economic fluctuations, NBCT’s policies and regulations, and technology deployment.

To prepare themselves for future business landscape, trends of Omni-channel, content licenses, and home shopping are arisen to contribute additional revenue and competitiveness.

Recalling 700MHz spectrum band to develop 5G technology

Currently, most mobile operators in Thailand hold insufficient spectrum in low frequency ranges (sub-1GHz) for 5G development and the 700MHz spectrum band has been occupied by digital TV broadcasting.

In order to resolve the situation, NBTC approved in principle for recalling 700MHz spectrum band to develop 5G technology to align with other countries such as Spain, Belgium, England, and Malaysia.

Digital TV industry encounters pressures from both revenue and cost perspectives leading to a downward trend in operating margin.

TV industry currently consists of 22 digital TV channels which can be divided into 4 main categories including

1) Children and family, 2) News, 3)  Standard Definition (SD), and 4) High Definition (HD).

Advertising is main source of Digital TV’s revenue

Advertising is main source of Digital TV’s revenue and it has been slightly worrisome in the past 5 years from 124 billion baht in 2014 to 119 billion baht in 2018 (-6%CAGR) in response to economic fluctuations, deceleration of purchasing power, and a shift in consumer behaviour towards TV substitutes and online media.

In the middle term (2019-2021), EIC expects the advertising revenues tend to increase by 5%CAGR based on an economic recovery.

Due to an intense competition between TV and online media, however, digital TV operators continuously get pressure on the creating a rich content which likely to rise operational costs and reduce operating margin from about 10% in 2019 to 8.8% in 2021. This will result in a downtrend in operating margin of digital TV business

Figure 1 : The total value of the advertising industry, and the revenues and operating margin of digital TV business
Unit : billion baht

01.png

Remark : Outdoor media includes billboards, cinema, In store, transit; Traditional media includes magazines, newspapers and radio
Source : EIC analysis based on information from Nielsen, Digital Advertising Association (Thailand) and Enlite

Apart from broadcasting digital TV, spectrum is also used for telecommunication network. In a transition period from 4G to 5G,  the International Telecommunication Union (ITU), a specialized agency who develops standards and be responsible for information and communication technologies related issues, has identified 5G spectrum with the combination of sub-1GHz, 1-6GHz and above 6GHz.

The commission made the retrieve prior to the end of digital TV license which will be due in 2029 (in the next 10 years) and will allocate 470-510MHz bands for digital TV broadcasting. In process of recalling, NBTC has given 2 options for digital TV operators including 1) switching to the range of 470-510MHz bands…

Author: Vorada Wanichprasertporn

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EIC or Economic Intelligence Center, a unit of Siam Commercial Bank Public Company Limited, is established to provide business executives with valuable insights for effective decision making.

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